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Save Money and Reduce Your IRS Bill With Simple Year-End Tax Tips

Save Money and Reduce Your IRS Bill With Simple Year-End Tax Tips

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Published by Michael Rozbruch
10 things taxpayers can do before December 31, 2008
to reduce the tax bill due on April 15, 2009
10 things taxpayers can do before December 31, 2008
to reduce the tax bill due on April 15, 2009

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Published by: Michael Rozbruch on Dec 12, 2008
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 Save Money and Reduce Your IRS Bill With Simple Year-End Tax Tips
10 things taxpayers can do before December 31, 2008to reduce the tax bill due on April 15, 2009
Inthistroubledeconomy,taxplanninghasneverbeenmoreimportant,andsmallbusinessesandindividualscangetstartedontrimmingtaxesnow,beforetheendoftheyear.Ithasbeenabadyearformany,soit’scrucialtoemployfinancialstrategiesthatcanhelpalleviatepotentialIRSincreasesandminimizetaxliability.WhatIdoasataxresolutionspecialistishelpreduceaclient’sIRSdebt,whichisessentiallyconductingfinancialplanninginreverse.SoIknowhowimportantitisforpeopletoknowtheirtaxpayerrightsinthefirstplacesotheycanavoidtaxtroubleaswellassavemoney.For2008,savvyincomeanddeductionmanagementcanhelptaxpayersmakethemostofabadyear.Peoplewillalsowanttoconsidermaximizingannualcontributionstoretirementplanaccounts,usinglongtermcapitallossestooffsetlongtermcapitalgains,andtakingadvantageofpopulartaxbreaksextendedfor2008.Thesedays,noonecanknowforcertainwhattheirfutureincomewillbelikeorwhatdirectionthefinancialmarketswilltake.Plustaxrulescanchange,especiallywithanewPresidentialadministrationandanewCongress.Thereforethegeneralruleisthatthemorepreparedyouarenow,thelessyouwilllikelyowelaterwhenthetaxmancomes.Sostartgettingyour2008taxesreadywiththesesimpletaxtipsthatcanhelpyoureducestressandsavemoney.1.
 
Accelerateyourdeductionsinto2008.
Youwanttoessentiallybunchtogetheryourdeductibleexpensesinto2008ifyoucan.Forexample,ifyoumakestateestimatedstateincometaxpayments,youcanmakethemonDecember31soyougetthededuction(onyourfederalreturn)in2008.Youcanalsochargetheseexpensesonyourcreditcard(s)in2008,receivethedeductionin2008,eventhoughyouwon’tbepayingforthemuntil2009.2.
 
Deferincomeintothe2009soyoudon’tpaytaxesonitin2008
.Ifyou’reself‐employedoranindependentcontractor(likeacarpenter,electrician,plumber,psychologist,psychiatrist,chiropractor,doctor,etc.)youcandoworknowin2008,butnotsendouttheinvoicestoyourcustomerstillJanuary1,2009.Thisisperfectly
6345 Balboa Blvd, Suite 195Encino, CA 91316Phone: (866) IRS-PROBLEMS or (818) 774-1813Fax: (818) 774-9361Web: www.TaxResolution.com
 
legitimateandyouwon’thavetopaytaxesonthatincometillyoureceivepaymentin2009.3.
 
Fileyourreturnontime,evenifyoudon’thavethemoneytopayyourtaxbill.
Ifyoucan’taffordtopayyourtaxes,youcanstillfileyourreturnontimeandsave25%onthefailuretofilepenaltyrightoffthebat.Whatmanypeopledon’tunderstandisthatfilinganextensionjustputsofftheinevitable,becauseit’snotanextensionoftimetopay,it’s justanextensionoftimetofile.4.
 
Accelerateyourmedicalexpenses.
Ifyouitemizeyourdeductions,there’salimitationonmedicalexpensesandyoumaydeductonlytheamountbywhichyourmedicalcareexpensesfortheyearexceed7.5%ofyouradjustedgrossincome.Soifyouhaveanymedicalproceduresordentalproceduresthatyou’reputtingoff,nowisthetimetogetthemdone.Youdon’thavetopayforthemnecessarily,youcanputthemonacreditcardandjustpaytheminimumbalanceonthecreditcard,butyoucantakethefulldeductionoftheyearthatittookplace.5.
 
Payyou’reanextra’smonth’sworthofthemortgage.
MakeyourJanuarymortgagepaymentinDecember,soyougetcandeductthatinterestin2008.6.
 
Payyourpropertytaxesearly.
Payyourpropertytaxesthatareduein2009bythelastdayof2008toacceleratethatdeduction.7.
 
Longtermcapitallossescanbeusedtooffsetlongtermcapitalgains
.Ifyouhadgainsatthebeginningoftheyearandlossesnow,youcanusethoselossestooffsetgains.Ifyouhavemorelossesthangainstheycanonlybeusedtooffset300ofordinaryincomeperyear.Pleasekeepinmindthoughthatunrealized(notactuallysold)losses,especiallythoseinretirementaccountsarenotdeductible.8.
 
Usegiftcontributionstoloweryourtaxliability.
Intermsofgiftgiving,youcantransferupto$12Kperpersonperyearwithoutpayinggifttaxontheamounttransfers.Ifyouhavemarriedgrandparent,theycangive$24Kperpersonbysplittingtherefist.In2009,thatexclusionrisesto$13Keach.Personsovertheageof70½cancontributeupto$100,000fromtheirretirementaccountstoacharityoftheirchoicewithoutpayingtaxesonthatincome.9.
 
Maximizeannualcontributionstoretirementplanaccounts.
Thisisimportantbecauseonesyear’slimitcannotbeaddedtothenextyear’sifnottakenintime.NowcontributionstoIRAsmaybeappliedretroactively,ifmadebeforethefilingdeadlineandanindividual’selectivecontribution.Asmanyplanaccountownershaverealizedin2008,itisthatmanagingataxpreferredretirementaccountisnota“setitandforgetit.”Nowin2008youcandeductupto$15,500perindividuals.Ifyou’re55andover,Ibelievethatgoesto$20k,andyoucanhaveanarraysofdifferentinvestmentsinyour401K.Astheindividual,youcanchoosethetypeofassetallocationorriskthatyouwant.

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